Life insurance companies use a variety of factors that affect an applicant’s life expectancy at the time a policy is underwritten. However, not all factors affect the premium or cost of the policy.
You may have one or more factors that will cause a life insurance company to use exclusions a policy or to decline the application.
There are two common types of life insurance policies. They are a whole life and a term life insurance policy.
Weight And Height
The weight and height of an applicant is a factor that affects the premium of life insurance polices.
This means that people who are overweight will pay more for a policy. Height and weight are typically used to determine a person’s body mass.
Their body mass is compared to an index when calculating rates for a policy. Underwriters for life insurance companies will use this index to set the rate for an applicant.
The applicant’s use of tobacco is another factor that affects the premium for life insurance polices.
Life insurance companies may have tiers for an applicant’s smoking status. These tiers may include a typical non-smoker, smoker or premium tobacco.
Special rates may also be given if the applicant has abstained from smoking for a specified period of time.
Users of tobacco but do not smoke may also receive a rate that is preferred over smoking rates. The type of tobacco use and the rates that are applied vary between life insurance companies.
The health status of an individual is also a factor that affects life insurance premiums. When applicants are completing their application for a policy one of the requirements is a medical exam.
This is done by a simple blood test or a swab taken from the mouth. The sample is sent for testing to see if an applicant has any diseases or other life-threatening conditions. A physical exam from your doctor is not required to obtain a life insurance policy.
All life insurance companies refer to an actuary table for the age of an applicant. A actuary table is used to determine how long a person will live. People that are younger are expected to live longer and have a lower premium for a life insurance policy.
This means that individuals that are young should purchase a life insurance policy early as the rate is typically guaranteed for the life of the policy. The cost for a life insurance policy will increase as the age of an applicant increases.
Applicants that have an occupation that is considered high-risk will pay a higher premium than those of a lower-risk occupation.
Jobs such as a commercial fisherman will have higher rating factors than those of a dentist. Underwrites for life insurance companies use an occupation chart to determine whether the risk factor for an applicant’s occupation.
The hobbies of an applicant can be also be used as a factor for life insurance. Typically, hobbies that are high-risk will be excluded from coverage.
Hobbies may include sky diving, scuba diving below a depth set by the underwriter and bungee jumping. If you are killed performing a high-risk hobby excluded on your policy, no benefits will be paid.
Term life insurance is available for periods of 10 years, 20 years and up to 30 years.
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